General Motors To Stop Selling Cars In India By End Of 2017, But Not Pulling Out

General Motors To Stop Selling Cars In India By End Of 2017, But Not Pulling Out

General Motors Co will stop selling cars in India from the end of this year, drawing a line under two decades of battling in one of the world’s most competitive markets. The decision was announced as part of a series of restructuring actions from the Detroit automaker on Thursday, and marks a significant blow to India’s strategy of encouraging domestic manufacturing. This has affected the company’s plans for India too as the sales haven’t picked up in FY 2016-17. The company sold just 25823 units in the last fiscal year and its market share has dropped below 1 per cent in India. However, there is a bit of good news for the company as exports saw a sharp climb from 37,052 units in 2015-16 to 70,969 units in FY 16-17. “We are not giving up benefits India offers as a local cost manufacturing hub with an excellent supplier base which is extremely competitive,” Stefan Jacoby, GM’s chief of international operations, said in an interview.

Read more ↓

Loading...

Chevrolet launched the Trailblazer in India in 2015

GM says it would no longer market its Chevrolet brand – its only brand of cars marketed in India – despite India’s promise as a market set to overtake Japan as the world’s third largest in the next decade.

But it doesn’t plan to leave India entirely.

It plans to keep operating its tech center in Bangalore and to refocus its India manufacturing operations by making one of its two assembly plants in India – the one at Talegaon, about 100 km (62 miles) southeast of Mumbai – into an export-only factory. It plans to sell the Halol plant in the western Gujarat state to Chinese joint venture partner SAIC Motor Corp .

“We are not giving up benefits India offers as a local cost manufacturing hub with an excellent supplier base which is extremely competitive,” Stefan Jacoby, GM’s chief of international operations, said in an interview.

GM’s exports from India, mainly to Mexico and Latin America, nearly doubled to 70,969 vehicles in the fiscal year than ended on March 31. The Talegaon plant has a capacity of 130,000 vehicles a year.

Jacoby said the move to turn the Talegaon assembly into an export-only plant will not impact GM Korea and its position as an export hub. India will export vehicles mostly to Mexico and South America, among other destinations, while GM Korea will ship Korean-made cars to North America, Southeast Asia, Australia and Pakistan.

Dan Ammann, GM’s global president, said the restructuring actions for India announced on Thursday in essence cancels “most” of the plan GM unveiled in 2015 to invest $1 billion in India to deploy newly-designed vehicle architecture as part of a Global Emerging Market vehicle programme or GEM for short, and build a new line of low-cost vehicles in India.

The decisions to significantly scale down GM’s operations in India are results of months of analysis over “where we are going to place our bets (globally) as a company,” Ammann said in an interview.

The Chevrolet Sail sedan launched in 2013 followed by a facelift in 2014

The move is the latest blow to Prime Minister Narendra Modi’s “Make in India initiative,” aimed at making the country a global manufacturing powerhouse.

Last year, Ford Motor Co shelved plans to produce a new compact car family designed mainly for emerging markets. India and China had been slated to be the main manufacturing hubs for the new range that was set to begin production in 2018.

The auto sector is a major employment generator accounting for about 29 million direct and indirect jobs in India. Moreover, the $93 billion industry contributes 7.1 percent to the nation’s gross domestic product and almost 50 percent of India’s manufacturing output.

Ammann said GM looked at many options but determined that the investment originally planned for India would not deliver the kind of return other global opportunities offered.

The new-gen Chevrolet Beat was the next car to be launched in India but looks like those plans will be shelved

Dan Ammann, GM’s global president, said the restructuring actions for India announced on Thursday in essence cancels “most” of the plan GM unveiled in 2015 to invest $1 billion in India to deploy newly-designed vehicle architecture as part of a Global Emerging Market vehicle programme or GEM for short, and build a new line of low-cost vehicles in India.

The Beat Activ and Essentia were the other two products lined up for India this year

The company had planned a flurry of launches in India starring from the new-gen Beat followed by the Essentia subcompact sedan and finally the compact crossover Beat Activ – all of which were showcased at the 2016 Delhi Auto Expo. We’ve tried to reach GM India for a comment but as of now haven’t received any information.